Central Government, through Notification No. 03/2026-HSNS Cess dated 20 May 2026, amended Rule 35 of the Health Security and National Security Cess Rules, 2026, which governs the utilisation and transfer of cess collected under the Health Security and National Security Cess Act, 2025. The amendment omits sub-rule (3), which earlier mandated that the Department of Revenue transfer the cess to the Health Security and National Security Cess Fund on a quarterly basis. Further, sub-rule (5) has been revised by removing the role of the Budget Division of the Department of Economic Affairs in identifying activities, schemes, and inter-se allocation of the cess, thereby vesting the responsibility solely with the Department of Expenditure, Ministry of Finance. In addition, sub-rule (6) has been amended to substitute the earlier accounting mechanism involving the Principal Chief Controller of Accounts, Central Board of Indirect Taxes and Customs, and approval by the Comptroller and Accountant General of India, with a simplified framework under the Chief Controller of Accounts (Finance). The amended rules continue to provide that the cess, including interest and penalty, shall first be credited to the Consolidated Fund of India and thereafter transferred to the designated fund upon parliamentary appropriation. The rules also retain provisions relating to utilisation of the fund for public health and national security activities and audit by the Comptroller and Auditor General of India. The amendments came into force from the date of publication in the Official Gazette.
Extract of Amended Rule 35 is as follows:
35. Utilisation of cess.- (1) The cess, including any interest or penalty, shall be credited to the Consolidated Fund of India and be utilised for the purpose as provided in section 7 of the Act after due appropriation authorised by the Parliament.
(2) The cess, credited to the Consolidated Fund of India under sub-rule (1), shall be transferred to a fund to be called the Health Security se National Security Cess Fund after obtaining appropriation from the Parliament.
(3) The transfer of the cess to the said Fund shall be carried out quarterly, by the Department of Revenue, Ministry of Finance.
(4) The activities, schemes and programmes to be financed from the said Fund shall encompass those related to public health and national security of India.
(5) The identification of the activities, schemes and programmes and the inter-se allocations of the cess, including any interest or penalty, for the said designated purposes shall be decided by the Budget Division, Department of Economic Affairs in consultation with Department of Expenditure, Ministry of Finance.
(6) The transfer of the amount to the said Fund, the debit of the Fund, and the maintenance of the ledger of the Fund shall be as per the accounting procedure formulated by the Office of the Principal Chief Controller of Accounts, Central Board of Indirect Taxes and Customs, and as approved by the Comptroller and Accountant General of India the Chief Controller of Accounts (Finance).
(7) The accounts of the Fund maintained by the Central Government shall be subject to audit by the Comptroller and Auditor General of India.
MINISTRY OF FINANCE
(Department of Revenue)
Notification No. 03/2026 – HSNS Cess | Dated: 20th May, 2026
G.S.R. 381(E).— In exercise of the powers conferred by section 35 of the Health Security se National Security Cess Act, 2025(35 of 2025), the Central Government hereby makes the following rules further to amend the Health Security se National Security Cess Rules, 2026.
1. Short title and Commencement. – (1) These rules may be called the Health Security se National Security Cess (Second Amendment) Rules, 2026.
(2) They shall come into force on the date of their publication in the official Gazette.
2. In the Health Security se National Security Cess, 2026, in rule 35, –
i. sub-rule (3) shall be omitted;
ii. in sub-rule (5), the words “Budget Division, Department of Economic Affairs in consultation with” shall be omitted;
iii. in sub-rule (6), for the words “the Principal Chief Controller of Accounts, Central Board of Indirect Taxes and Customs, and as approved by the Comptroller and Accountant General of India”, the words and brackets “the Chief Controller of Accounts (Finance)” shall be substituted.
[F. No S-25014/2/2025-ST-II-DOR(Pt.9)]
MUTHURAMAN C,Under Secy.
Note: – The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, sub-section (i), videnotification No. 01/2026-HSNS Cess, dated the 1st January, 2026,, and subsequently amended vide notification No. 02/2026-HSNS Cess, vide number G.S.R. 78(E), dated the 30th January, 2026.
